Should Govt pay rates on its properties?
During the debate about the previous government’s Three Waters policy, there was constant mention from those who opposed it, including the Opposition parties, about it being a government “asset grab”.
This narrative was that good honest, hard-earned assets built up over years by local bodies would be seized by the government and ordinary people would have no control over them. That wasn’t quite true.
As someone who had seen both Labour and National governments seize public assets in the 1980s and 1990s and sell them off, I was cynical. Back then private individuals and companies bought public assets for a song at great cost to consumers.
But the last government’s plans an “asset grab”? Surely a government owning an asset for all its people is just as public as a council owning an asset for all its people. Apparently not with the Three Waters debate.
But now the boot is on the other foot for the Government. Our councils find themselves battered by large cost of living increases. Water infrastructure needs enormous investment, subsidies for public transport have been slashed and, in Wellington in particular, earthquake strengthening is costing an arm and a leg.
The current proposed Draft Long Term
Plan rates rises in the Wellington region include Greater Wellington Regional at 19.8%, Wellington 18%, Porirua 17.5%, Upper Hutt 19.9% and Lower Hutt 16.9%.
We all have our pet peeves about wasteful spending. Cycleways are mentioned are lot but they are largely paid for by central government and cost a small percentage of total council expenditure. I fume about the Reading Centre funding, but it’s a drop in the bucket in the overall scheme of things.
Are the proposed rates rises in the Wellington region examples of out-ofcontrol-spending by far-left councils? Or are they, as Hutt Mayor Campbell Barry argues, “driven by fixed costs skyrocketing and infrastructure deficits. Same story across NZ. The system is broken.”
If we had a lean and mean council somewhere that cut costs without reducing services or staff and had only a nominal rates rise, I might be persuaded that Mayor Barry is wrong. It’s not just Wellington facing hefty rates rises, but all councils. You can hardly call Porirua and Upper Hutt councils profligate far-left organisations.
Yet despite the challenges facing local bodies, central government doesn’t pay a cent in rates on its many properties in the region.
In a move with rare unanimous support from his council, Auckland Mayor Wayne Brown called for the Government to pay rates on all its Auckland properties. Brown antagonised many after the floods last year but lately he’s been talking a lot of sense. His call for government to pay rates was rejected by the prime minister who does, however, believe that “there’s a very good conversation to have between central and local government about how we jointly fund what we call city and regional deals”.
Wellington Mayor Tory Whanau supports Brown’s other call, for central government to share some of its GST take with councils.
You might, like I did over the Three Waters debate, say that making central government pay rates would be futile, as they would simply claw the money back through other means. Perhaps, but given how many government properties there are in Wellington, some councils would get a much-needed financial boost if such a scheme was implemented.
Wayne Brown also loudly wondered why churches and airports are exempt from rates. Good point. While churches do some great work with the poor in Wellington’s inner city, in Auckland in 2018, the Church of Scientology was able to spend $16 million on property, largely rates-free. “Why does a man in the street have to pay for them and they don’t, especially when they’ve got more money than the man in the street, who’s a bit poorly off at the moment?” asked Brown. Despite his constant use of delightfully retro 1970s sexist language, he makes a great point.
So are we to expect hefty rate rises for a while yet? Yep. The Government may water down Three Waters, give it a buzzy new name, and keep the main thrust of it minus co-governance.
But if they simply leave mounting infrastructure costs for councils alone to deal with then they could face revolt from smaller conservative rural councils, as well as big city councils.
A possible scenario is that various mayors may work out how much of a rates holiday the Government is getting in their city, and the Government may pay this directly or indirectly. But don’t forget they have big tax cuts to landlords to deliver first.
Meanwhile, I dream of a central government that can look at problems and fix them immediately without bickering about who pays what.
Pipes need fixing, ferries munted, trains decrepit, earthquake strengthening needed? Government steps up and does it then bickers about the cost afterwards. Yet if this and the previous government are anything to go by, that scenario is going to remain a dream for a long time yet.